April is usually worst month for chip stocks. Will this continue?

In This Article:

Markets' Volatility Index (^VIX) is surging ahead by over 10% Tuesday morning, the second trading session in April. The month has historically been a period of "unwinding" momentum for stocks, according to BTIG Managing Director and Chief Market Technician Jonathan Krinsky.

Krinsky joins Yahoo Finance Live to discuss whether the month — which is also the beginning of 2024's second quarter — could put a pause on year-to-date gains across markets and industries like the semiconductor landscape:

"It's actually the worst month of the year on average for long-short momentum strategies. We're seeing areas like semis, which have had an amazing run starting to pull back. And then you're seeing areas like utilities which have lagged over the last few months start to actually perform well. There's different parts of the market doing different things. But, ultimately when you get that kind of momentum, that correlation break, that's when you see the rising Vix like we're seeing today."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- The market sell off is accelerating this morning during a week of economic data from the labor market and from the manufacturing space. Our next guest is looking at areas where momentum might start to unwind and implementing a playbook to mitigate potential risk with regards to that.

So joining us now, we have Jonathan Krinsky, BTIG managing director and chief market technician. Jonathan, thank you for being here this morning. I want to start with you on some of the volatility that we're seeing because we're seeing that the VIX is really on a tear today, up I think 1.3 points as of the last time that I checked here. Talk to me about what that is an indication of when you are looking at the technicals and what it means for what this market is trading on and what they're thinking about what the Federal Reserve's next moves might be.

JONATHAN KRINSKY: Yeah. Well, I mean, ultimately the VIX is primarily an inverse to what the market's doing, right? Well, you can have periods where the VIX will go up in a rising tape generally. VIX up, it happens when you get market selling off. And I think when you've looked at what's going on in the market over the last few months, it's really a function of massive dispersion.

So you've had the winning stocks, the high momentum stocks doing extremely well, and the low momentum stocks doing extremely poor. And so there's been a lot of volatility in the single stock space below the surface, but they've just kind of offset each other. And so you've kind of had this calm S&P 500 on the surface, and that's coincided with a low VIX.